South Korea Moves to Lift Institutional Crypto Ban With Proposed 5% Corporate Investment Cap

• South Korea allows companies and investors to allocate up to 5% equity to top cryptocurrencies.
• Split trades and price limits aim to manage volatility and liquidity risks effectively.
• The policy diverges from Hong Kong and Japan, which are tightening corporate crypto oversight.
• Nearly US$110B (AU$166.1B) in crypto assets left South Korea in 2025 amid restricted institutional participation.

The Financial Services Commission of South Korea is advancing plans to allow limited corporate investment in cryptocurrencies under a tightly controlled framework. The proposed guidelines would permit listed firms and professional investors to allocate up to 5% of their equity capital to digital assets each year.

Eligibility would be confined to the top 20 cryptocurrencies by market capitalisation, reflecting regulators’ focus on liquidity and market depth. Whether US dollar-pegged stablecoins will fall within the approved investment universe remains under review.

Local media reports suggest the FSC could finalise the guidelines within the first months of the year, with corporate trading potentially commencing before year-end. The move builds on regulatory changes introduced in mid-2025, when authorities began easing restrictions by allowing certain entities to sell crypto holdings.

South Korea’s institutional ban had been in place for nearly a decade, leaving retail traders as the dominant market participants. That structure contributed to significant capital leaving the country, with approximately US$110 billion (AU$166.1 billion) in crypto assets flowing offshore in 2025.

Related: Florida Advances Proposal for Standalone Bitcoin Reserve Ahead of 2026 Session

Liquidity Boosts Expected Despite Cap

Regulators have sought to mitigate risks associated with renewed institutional participation by pairing the allocation cap with execution controls. Planned measures include split trading requirements and price limits intended to contain volatility as liquidity expands.

Market observers expect institutional demand to concentrate heavily in Bitcoin, with Ethereum also likely to benefit under the new rules. Despite the inclusion of up to 20 assets, analysts do not anticipate meaningful inflows into smaller cryptocurrencies.

The policy shift places South Korea at odds with neighbouring jurisdictions that have recently tightened oversight of corporate crypto exposure. Unlike South Korea, Hong Kong and Japan have introduced stricter rules to limit corporate holdings and reduce systemic risk. These contrasting approaches highlight a regional divide in how governments balance innovation with financial stability in digital assets.

Related: Japan Moves to Boost Crypto Safety With New Liability-Reserve Rules for Exchanges

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